Government denies the warning signs of Cuckoo Funds

Cuckoo Funds has been recently used to describe big investors investments poured into developing build to rent housing. However, on average the developments funded by cuckoo funds are not affordable for the average individual or family. Some of the main investors that comprise of the cuckoo funds are large institutional investors like pension funds, real estate investment trusts (REITs) and special private rental firms. Investors are increasingly interested in attempting to tap into the growing demand for Irelands rental market.

Cuckoo funds are known for buying properties and charging insanely high and unaffordable prices for the properties. However, the Housing Minister Murphy has denied that housing is unaffordable. Murphy continued to argue and defend the government’s record on housing and claimed that the government has protected renters.

However, individuals have accused the government of ignoring the red flags of activities related to cuckoo funds. Multi-national venture funds have been able to sweep up properties and resell them for immense costs. Cuckoo funds have created 3,000 new housing units in 2018.

The government has not yet claimed to see the dangers …

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The Help to Buy Scheme

The Help to Buy (HTB) scheme is an incentive for first time property buyers. The scheme helps individuals with deposits needed to buy or build a house or apartment. The incentive is that the scheme will give individuals an income tax and deposit interest retention tax (DIRT) refund. This refund extends up to four years of income tax and DIRT tax paid in Ireland in arrears. The incentive has a limitation to a maximum of 5 percent of the purchase value of a home up to a value of €500,000.

To qualify for the scheme, individuals must be first time buyers. The property bought or going to built must be newly built with the construction subject to the value added tax (VAT) in Ireland. The requirements of the Help to Buy scheme also involves taking out a mortgage on the property with a qualifying lender. The loan to value ratio must be at least 70%. This loan to value ratio denotes the percent of the loan that covers the purchase value of the property.

The scheme is estimated to contribute about …

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Housing crisis only expected to get worse until 2023

According to Focus Ireland, the most optimistic statement on housing released by the government reveals that the housing crisis will continue get worse until 2022 or later. This statement is considered very optimistic as housing issues will likely progress into 2023.

The Department of Housing targets 48,000 new home completions by 2023. If this target is achieved, 2023 could be the first time that housing supply could potentially exceed housing demand. Figures provided by the Department of Housing have shown the first time that an admission denoted housing and homelessness will only continue to get worse in the next few years.

Although the Department of Housing has set a target of 48,000 new homes to be built by 2023, this target could be missed. If the target is completed or surpassed then burdens associated with the housing crisis could be significantly reduced. The problems that could be reduced would include reduced homelessness and new homes would create more supply for social and affordable housing. However, if homes were to be sold at current market values then the impact on …

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Heightening Taxes to Boost Spending

According to the Nevin Economic Research Institute (NERI), the government needs to look at generating extra funding for housing. How do you generate additional government funding? Taxes.

The need for increased spending on housing can be gained from heightening employer-related PRSI, property, gift and inheritance, and carbon taxes. Irelands government spending and tax revenue amounts to much lower than the average EU spending and revenue.

According to the Department of Finance, in 2018 just over €55.5 billion was received by the Exchequer. Tax on income and wealth amounted to 10.5% of the Irish GDP in 2017, while tax on individual or household income amounted to 7.3%.

Countries in the EU that have progressively developed more stable housing and social housing taxes and tax revenues are comparatively much higher than Irelands. For example, Denmark has established housing that over 22% of dwellings are social rented. Denmark’s tax on income and wealth amounts to 29.7% of their GDP and tax on individual or household income equates to 25.4% of Danish GDP.  Denmark exemplifies a similar country in the EU where the housing market …

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Changing Population and Effects on the Housing Crisis

According to the Central Statistics Office, Ireland’s population is expected to grow from 4.78 million in 2019 to 5.9 million by 2046. The growth is occurring due to economic growth and recovery since the 2008 recession. The population of Ireland has increased by just over a million people since 1999. The rapid population growth suggest an even greater demand for housing in the future. The housing crisis will only continue to progress, because demand for homes and apartments will only continue to grow as the population increases.

An additional 1.12 million people will need to be housed by 2046 as population continues to grow. At least 12,500 homes need to be built each year until 2021. This is a massive task, considering that Ireland built just over 8,500 homes in 2012.

Demographic changes in population also present challenges in supplying more housing. Ireland’s population is aging. The 2016 National Census has confirmed that there has been a 19.1% increase in people aged over 65. By 2046, people over the age of 65 are expected to account for 1.4 million of …

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New Offers for Social Housing at Staggering Prices

A developer by the name of Pat Crean has offered 36 apartment for social housing to a local Dublin authority. Pat Crean’s Marlet development group offered to construct the apartments for the Dundrum area of Dublin. The Marlet group comprises of one of two fast-track housing applications for the Dundrum area of Dublin. The other part of the fast track housing application is formed by the Crekav Trading GP. Crekav Trading GP has proposed to sell 25 apartments from its overall planned 253 apartments in Greenacres, Longacre and Drumahill house. These 25 apartments have an estimated cost of €8.346 million.

The 36 apartments have been estimated at a cost to construct of €11.8 million. Meaning that on average the cost per apartment amounts to €327,888. In comparison, the Crekav trading GP’s 25 apartments have an average cost of €333,840.

The median home value in the Republic equates to €237,000. In comparison to the united states the median home value is $226,800. Adjusted to euros the median cost of a home in the US amounts to only €200,363.09. While the average price per …

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The Slowing Growth of Property Prices

The cost of property throughout Ireland has skyrocketed over the last 20 years. With the uncertainty in regard to Brexit, prices of homes are said to increase by less than recent years. Slower growth in price of homes may appear to be beneficial for the Irish housing market, but in reality costs of property are still trending to increase in price. Prices rose by 3.9 per cent compared to 4.3 per cent one month earlier. The increase is about four times less than the average percent growth increase of past years in Ireland.

So how will Brexit effect the housing market in Ireland? Some individuals believe that if the deal goes through, Ireland could play a more significant role in Europe. This trend is becoming prominent in Dublin. Massive companies like Facebook, Google, Paypal. eBay and Microsoft have moved their headquarters to Ireland. This change over the last few years means that there will be an increase in jobs and thus an influx of people. The more people means demand for housing will only further increase. If there is …

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RTE Today with Sean O’Rourke has Irish Mortgage Brokers discussing cash buyers

The Today Show with Sean O’Rourke had us on to discuss an article written by Charlie Weston in the Indpendent about the strong level of cash buyers in the Irish property market. Marie Sherlock from Siptu the trade union was also on, what followed was a robust conversation where there was some interesting debate but also a lot of agreement on the problems, symptoms and solutions to the ills of the Irish property market.

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Is the Housing Gap Increasing?

With an attempt to lift the housing market out of the current crisis it’s in, the Irish government is left to answer one very important question. Is the Help to Buy scheme even helping?

Or…is it worsening the gap of the home hunters who are looking for the ability to buy?

As what is already well known, house prices are soaring. Without the supply of housing increasing at any fast rate, this will continue to be the case.

Therefore, home prices are continuing to rise, much faster than incomes are rising, and the gap between available homes and affordable homes is continuing to worsen.

When looking at reports from CSO, the average wage in Ireland is €45,075 for a full-time employee. That number is, however, much lower as a median, where most of the working class clusters. The median is found at €28,500. A drastic difference and even more of a surprise when finding that, that means, nearly half the population is below that number.

This is where the Help to Buy scheme comes into play.

Introduced just earlier this …

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How the Mortgage Market can Return to Normal Levels

Last week the Institute of Banking held a forum on behalf of the Irish Mortgage market in which Deputy Governor Ed Sibley delivered a speech addressing much of what is prevalent in the country today.

It began by briefing the current housing situation in Ireland. Simply put, it’s dreadful. As many are on the pursuit of suitable housing the “toxic legacies of the financial crisis” are proceeding to cause mayhem throughout the nation.

The forum started by discussing the role of the central bank. The central bank plays a much greater part in the overall mortgage market than one may think.

It is up to the central bank to ensure that “the economic and social good of mortgage provision is prudent, sustainable, and that the best interests of consumers are protected. “

The central bank has had to take extensive interventionist movements in the Irish mortgage market since the financial crisis as Ireland typically experiences extreme economic and human hardships when these certain risks arise.

In order for the mortgage market to function properly, consumers …

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